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Author Topic: What Due Diligence Means and Why You Should be Doing it!  (Read 942 times)
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tamo42
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« on: 2011 Jan 31, 10:18:51 am »



Recently, I've had some very odd discussions in the chat on a multitude of subjects - discussions that could result in serious losses for the people involved. What they all have in common is a lack of due diligence. So I've decided to take a minute and discuss this all-important concept and how it applies to anyone buying anything (that means you!).

In the business world, due diligence is the responsibility of the buyer to make sure that he is getting what he thinks he is getting. For example, if you are considering a 2006 Honda Civic, you would have certain questions that need to be answered before you decide to buy. For such a car, you might want to find out if it has ever been stolen, if it has been in a wreck, its mechanical condition, and how much other similar cars have sold for in the recent past. For a car, these are all pretty easy and cheap things to find out. You can get a carfax report, have it checked out by your mechanic, and look up sales information on eBay or in the Kelly Blue Book. The total cost for all this research might be $100. $100 is definitely worthwhile to protect the thousands you are considering spending. After all, you might be getting a car that is going to break in a month, which would then cost you $3,000 to fix. Or you might be over-charged by the dealer and lose thousands more that way.

Independent information is what allows you to know if the deal you are considering is fair or not.

What this information consists of will vary depending on what you are buying. But all such information has one, extremely important thing in common: due diligence research does not come from the person trying to sell you the item.

It's a buyer beware world, and you have to beware!

Recently, there has been a lot of talk here on LBC about modern rare Chinese coins. As you probably all know, badon has been publishing informative articles about the benefits of being in this market and his picks for good deals. Even in this case, when people seem to making money hand over fist, you need to do your due diligence. What is your overall view on where the market is going? Why is that your view? What segments do you think will do best? Why? Are you going to pay a premium for graded coins, or are you willing to risk getting inferior coins but possibly score a great deal? What have other similar coins gone for over the past few weeks? What degree of rarity are you after? Are you willing to take a risk on unknown mintages?

All this information boils down to one question: Is the current offer a good deal?

Blind herd following only helps those sellers who are trying to take advantage of dumb money. You are here at LBC to be/become smart money! Do your due diligence!


* research.jpg (40.42 KB, 292x417 - viewed 407 times.)
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Neal McSpadden
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GhostRider808
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« Reply #1 on: 2011 Jan 31, 01:37:12 pm »

Tamo42,


Nice article you got here! As always DYODD but it sure does help if you hang around more knowledgeable people than myself and at least learn the basics.  Its no secret that I have ALOT more to learn about modern Chinese Coins.  Good thing LBC makes me RICHHHHHHHHHH. 
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tamo42
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« Reply #2 on: 2011 Jan 31, 02:02:38 pm »

Yes, learning from others can be a great resource. But ultimately, the decision is up to you.
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Neal McSpadden
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groovemachine
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« Reply #3 on: 2011 Jan 31, 05:31:01 pm »

Guys, listen to what tamo42 is saying and think for yourselves!  There are people trying to hoodwink you at every turn.  You are your own best advocate.
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dobedo
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« Reply #4 on: 2011 Feb 01, 08:20:22 am »

Yes, my decision is that I will blindly follow tamo42's advices and learn from groovemachine.
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tamo42
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« Reply #5 on: 2011 Feb 01, 10:13:52 am »

lol
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Neal McSpadden
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badon
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« Reply #6 on: 2011 Feb 01, 05:53:34 pm »

Good thing LBC makes me RICHHHHHHHHHH. 

Haha!

Yes, my decision is that I will blindly follow tamo42's advices and learn from groovemachine.

Double haha!

As financial information goes, it doesn't get much better than LBC. There are a lot of people who are nervous about the huge amounts of money people are making on LBC, and they wonder if there's a catch to it somewhere, or if something dark is lurking around the corner.

Things happen, it's a fact. But, usually it happens to everyone NOT reading LBC. We tend to be pretty on top of things, and although we have to ride out the bumps, dips, and ripples like everyone else, we're pretty confident we know what the long term trend is.

We've been around since 2004, and our track record speaks for itself.

While I think if you were to blindly follow anyone, LBC would be a good place to do that, you can't be too lazy. It's possible to screw up good advice just as easily as it is with bad advice. That's part of the reason why I write up my recommendations list - it cuts out a lot of possibilities for mistakes, so there's less need to worry about unforeseen problems.

In any case, knowledge is power. I occasionally make mistakes IN MY LIST. If you know so little about the stuff in my list that you can't spot a serious mistake, you make fall victim to it. So far, the readers that do their own due-diligence have been able to alert me to an error so I can correct it before someone erroneously relies upon it, but that only works as long as people are doing their own due diligence.

I think the primary reason people trust LBC is because we're not selling anything. It makes no difference to anyone here whether you follow our advice or not. We write up what we know, and put it out for everyone to see. For years, we just did it for our own fun, because we knew it's possible no one would read it.

Now that LBC is much more well-known than it was, we have to be more thoughtful about what we write up. Reading back on our old postings though, it seems we did pretty good, so not much needs to change. People like groovemachine, fanofbadon, and useurbrain have helped to keep us grounded, and aware of the fact that lots of people who don't always know what they're doing may try to follow our advice.

That has helped us improve our articles, and prepared LBC for the grander audience it serves now.

So, in short: While LBC is making people rich, here's thanks to all of our haters, detractors, hecklers, well-wishers, nervous-nellies, skeptics, questioners, etc who keep us on our toes, and remind us that despite our success, we're fallible, and we need to be mindful of the varying levels of sophistication in our new audience.

Thank you!
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